from Follow the Money

Cows, calves and the interest rate

May 16, 2005

Blog Post
Blog posts represent the views of CFR fellows and staff and not those of CFR, which takes no institutional positions.

More on:


Trackback is a dangerous thing. I just have learned that some of my blog posts have been compared to modernist poems. No doubt my last couple of posts have been a bit of a slog, heavy on both data and jargon (though try reading Wall Street research on collateralized debt obligations ... ).

So I thought I should lighten things up, at least briefly. In Nicholas Dunbar’s book about the collapse of LTCM, I came across this gem:

"When people first started lending things to each other, it was as friends. You might lend a spear to a friend going hunting, or lend your time to help gather in the harvest. The loans didn’t last long, and were repaid in kind. What about lending for longer periods of time? The most important possession people had was livestock, but animals have a unique property -- they breed. If you borrow a herd of cattle for year, you probably will end up with more than you started with."

Consequently, the Sumerian and ancient Greek word for interest was "was the same as the word for calves."

Sort of interesting, at least to me. My grandfather raised cattle.

Now the cutting edge of the market is to bet not on speculative credits, but on the correlation among speculative credits (to paraphrase Jade’s comments on an earlier post). We have come a long way.

On a different and more serious note, the Treasury intends to issue its foreign currency report tomorrow, so we soon will soon know whether or not the US is going to formally accuse China of manipulating its currency. Talk about having no good choices.

UPDATE: Treasury Secretary John Snow will release the foreign currency report at 2.30 pm today.

More on: